My EBay business is near colapse

Hello all!This is my first post and I am very glad I found this web site. The information contained here is very valuable and I am trying to learn as much as I can.

My company has been working on EBay for several years. The operation is small but until 2004 the business was doing fine and sales have increased steadily. However, after the 2005 EBay fee increases, everything changed. The cost of EBay/PayPal fees jumped from around 12% total gross sales in 2004 to 24% in 2005. We pay anything from $4K to $8K EBay monthly fees. This is killing our profit margin not to mention that average selling prices are falling consistently. Our current situation looks pretty grim if we don't take immediate action to improve our margins and sales.

I was hoping someone here could help me out with some issues we are having:

1. EBay Billing: currently, we don't have a way to review or analyze what EBay charges us to sell. We just receive the Invoices every month and pay for them. There is no way for us to manually analyze the Invoice, which sometimes contains more than six thousand entries. Let's not talk about optimizing our listings with this information, we don't even know if EBay is overcharging us or not! On top of that the EBay Invoice tool is now broken!! I can't even see the Invoice online anymore. This is a very serious problem and we think there must be some kind of software or tool that could help us with this. EBay has been less than cooperative to help us in this matter. It would be great to have the data in a comma-delimited or database format. EBay is glad to let us wonder what to do with the 10 megs HTML Invoice (If we are able to get it that is)

2. Shipping: Our current shipping system is very primitive. We use USPS services for 95% of our packages. We don't offer delivery confirmation and we have to take all the packages to the USPS office. We haven't found a cost-effective way to optimize our current system. I estimate we spent around $ 5,000 monthly on shipping expenses and send over 500 packages a month.

3. E-commerce web site: We think it is critical for us to set up our own web site to increase sales and avoid EBay fees as much as possible. Do you think this is a good idea? We don't have a clue where to start regarding setting and operating a new web site. Furthermore, since we will still operate on Ebay, we need a way for both systems to interact (for example, to avoid selling the same item twice, one in our site another one on EBay's).

I am VERY sorry for the long post and I apologize in advance. But I am getting pretty desperate here. If things don't improve in the next months we may be forced to close shop. Any comments would be greatly appreciated. Thank you so much.

We currently don't use any Auction Management Software. Only TurboLister and EBay's Selling Manager Pro. We are considering suscribing to Channel Advisor Merchant which is light years ahead of our current situation and looks like is just what we need. The only thing is that the merchant is not cheap and I hate to pay the Merchant on top of the already extreme Ebay fees.

Well, I think you have done amazingly well to get to your level without using a third party management system, but you simply have to bite the bullet and go for software which allows you to create one database of inventory , gives you a storefront / website and automates / integrates with the shipper of your choice. Channel Advisor & Marketworks spring to mind, but check out all of the US options – its` not a change you want to make twice! The key to these software systems is that they are database driven, rather than listings driven, so that any item in your database can be sent to any supported venue at the click of a mouse – eBay, Overstock, Website, Googlebase, etc. As these software systems create a website / storefront for you automatically it negates the need to create one yourself. Also, this level of software has its` own reporting tools and so your analysis of how you are doing can be useful and meaningful. Critically, the “back end” admin is the same regardless of the venue your item was sold on, so you are still only dealing with one set of back office. My only reservation about certain large software systems is that they charge per listing - not just a small commission on sales – and I personally would avoid that system. A small commission for the huge leap in efficiency, automation., integration etc is often worth it, and you get a “free” storefront / website to boot.

Having made this change you are then in a position to make THE vital strategic change to your business – make eBay a part of your online sales, not your exclusive venue. Become an ecommerce business, not an eBay business. Learn to “harvest” eBay sales & traffic to generate sales to your website. For instance, once someone has purchased from you on eBay, make them your customer (not just an eBay customer) by sending them a final “thankyou” email with your website details, perhaps a discount offer for any website purchase made, ete etc. The level of software you need to migrate to will have some tools for this built in, such as creating discount codes that you can email. This is just one example of many …be creative. There is nothing stopping you having your website details at the bottom of every email you send out / reply to as a “signature”. Feed free sites like Googlebase (again, this should be built in with the high level management software mentioned ), participate in forums and have your website as a signature again. Exposure is the key – you can have the best product / price / website in the world but if nobody knows about it …

Make the strategic shift to sell online, not be reliant on a single venue. Analyse any potential venue for its` strength - eBay for its huge traffic, a website for its` low cost of sale, perhaps Overstock for its better sell through rate etc etc and learn how to exploit those strengths for your own strategic benefit.

Look for areas to save your time – such as the posting regime – by automating as much as possible and really make full use of the new software to maximise its` economic benefit. It can sometimes be worth giving away a little margin (for example, using a slightly more expensive shipping system but they collect from you) in order to free your time. Failing that, don`t post out every day. Sit down and think about each stage of what you are doing and have a bet with yourself that you can find a better way to do it … don`t lose the bet. Stealing time from such areas will free you up to concentrate on the strategy outlined above. It will take months to get this basic strategy in place and starting to reap benefits, but you will start to feel more in control of your own destiny and income from the moment you make the decision to do it.

This is only a brief reply, and it is always a little risky to “diagnose” without knowing all of the details, but I hope it at least helps with some ideas.

Graham, thank you for your encouraging words.I have to say that your recommendations are pretty much in line with the course of action we've determined we need to take.Before I was contacted by the CA representative I didn't even imagine that an Auction Management Software was so important. I was basically looking for a solution to our EBay billing problem. You wouldn't believe the way we manage to conduct business right now. Painful, time-consuming, lots of manual stuff, etc. We have managed well but I think is time to get serious. On top of that with the stellar EBay's Powerseller support we have, now we don't even get ANY Invoices. The Invoicing tool on EBay site is broken and it seems they aren't in any hurry to fix it. They expect us to just pay and forget.

I guess the first thing to do now is to determine which is the best software solution. I've been blown away by the possibilities of ChannelAdvisor Merchant but I wonder if there are any other alternatives out there. The company looks rock-solid and its portfolio of clients is impressive. CA only charges 2% of your sales (or $500 in case you dont make 25K a month). Sounds reasonable and is not a per listing fee like you mentioned.

Are there any limitations/disadvantages of using CA e-commerce store front vs. developing our own e-commerce web site? Further comments are very much appreciated.

I`m pleased our ideas coincide! With regards choice of software, as you are US based (and therefore have more options) I think some input from US sellers on what they use would be more beneficial than a UK perspective - there are plenty of comments elsewhere on the this site.RegardsGraham

It might help in the meanwhile to determine where your eBay fees are at, and how to further optimize your listings without hanging yourself in fees...

To answer your other questions:

1) Additional to above, I do believe that Channel Advisor might be your best bet. At least from my experience...using only Channel Advisor and Infopia on this end, I would believe Channel Advisor might be your best bet considering the difference in upfront cost.My advice would be to use Channel Advisor until you have a full grasp on whats coming in and out in cost...then...once you have some leverage, pull out to Infopia....which has an overall better solution I believe...especially considering point 2

2) There is no reason that I can think of that you should solely be using USPS. As a former Logistics Manager once upon a moon, Ive figured out a few standards in the shipping industry that I would be glad to share with you. Private Message me for more details.Otherwise, give a call to DHL, UPS and FedEx (in that order) and let them know the volume of shipping you do and what they can offer you. Another suggestion is to check out TNT shipping. Although somewhat an unknown, I have been using them for close to 2 years now as my only shipper for international goods. They are highly recommended in my book.

3) The website is quickly becoming a commodity you should not be without when operating an eBay store. Personally, this is something that I do myself as far as design and coding, so I might be a bit biased. I can personally help you set up, and if interested, again, private message me and I can discuss this with you further.Otherwise again, the general advice would probably to use a Content Management System to alleviate the process of entering either new content or new items. Additionally, using a content management system, you are allowed changes to practically any portion of the site with as little knowledge as knowing how to use MS Word.OS Commerce or similar and RSS feeds I think are crucial in the implementation of the site as it allows you further expansion to promote and optimize your site for further exposure and revenue.

blackstar:I must confess that I haven't checked out EBay's Sales reporting Tool. The problem with most of EBay's solutions is that they don't keep the data for long periods of time. To make a meaningful analysis of EBay fees paid I will need data from at least a couple of years back. The good news is that I finally managed to import the HTML Invoices to my own database and create a couple of Excel reports to monitor my EBay stats. I managed to import 2003, 2004 and 2005 data, no small feat considering that the SQL Server table has now more than 300,000 records. But I now have a great analisys tool that I was in need of for a long time.Regarding the shipping issue, there are two reasons why I mainly use USPS for most of my shipping: very affordable costs for small packages and free shipping supplies. For international shipments costs have increased substantially in the past year with USPS so I am open to other options. I will be very interested in your feedback regarding this matter and the web site design but I am not really sure how to PM you. Please, drop me a line at jj@interzone.net

Poppygirl:Thanks for your links. I've read some of your previous posts and it seems you are the unofficial ChannelAdvisor promoter on this board. I must say I agree with a lot of your previous comments about CA and I should be deciding my move to the Merchant in the coming week. Are there any more comments you can make specifically on the Merchant functionality? I have some hesitation in moving my Inventory from our own database to the Merchant. My fear is that the speed of accesing the Merchant is not going to be good compared to our local database, application and the TurboLister. What about CA tech support? Any comments regarding CA strong points or weaknesses would be helpful.

Congratulations on an amazing accomplishment. I'm sorry to hear how much of a problem eBay is causing you. For what little comfort it may give you, you are not alone. Although my personal eBay sales are modest I work for a large eBay consignment store with hundreds of listings each 10-day period. We did have a lot of BIN items in our store that often sold after months. No longer. In my opinion, eBay is shooting themselves in the foot and eBay will suffer (one hopes) a tremendous backlash from all their sellers. This action will only cause increased use of the alternative auction sites like Yahoo and Amazon. For example may I direct your attention to a closed auction, #120014074576, which you might find interesting and informative.

I would also like to recommend that you check out the Professional eBay Sellers Alliance, which is the closest thing that exists to an eBay selle's union. Their website is www.gopesa.org/pes_index.cfm

We are ex-UPS users. We now ship exclusively through the USPS and DHL who come to our location each day and pickup the packages we have to go out. We set up our DHL account through Worldwide Express, a provider of DHL services, and they give us a substantial discount. Their service has been superb and I highly recommend them. Our Account Rep is Dustin Thevenow who can be reached at 1-317-938-5656. Their website is www.speedship.com

As with all third party providers for eBay is is not an ultimate solution, for eBay UK the get is fast and 2nd shop category is not get integrated but it will be. Support is all email based and resposes are from a quick as 10 minutes to as long as 2 days depending on their queue I imagine. Channel is the best eBay/multimarketplace solution currently. eseller pro seems to be getting good reviews but I have had no success in contacvting them to see if their solution is better than what I already have. I have never had problems with the speed of channel and its made my life alot easier specially now when my tax return is due! Only using a third party provider you really can see its +ves and -ves as it will vary from business to business!

Let's get you fixed! I have read the responses and once again I have to throw in my input. Take a glance below and then apply it to your business. You know your business the best so only take everyone's opinions as opinions. A large number of people that chat on blogs and auctions are not talking big numbers. The key is to talk to people and take advice from people, and then form your own opinion. Talk to people that are making the big bucks.

I'm going to disagree with probably most of the people as I mostly do on this forum. I think everyone is missing the boat here. It must be very confusing for you to listen to so much!

While auction management software might be a solution, I think there are two major things YOU need to look at. If you are getting killed on eBay fees and don't have a way to track your numbers then why is everyone recommending you give 5% or $500 a month to some other company who 25% of the time doesn't have an efficient system.

1) Accounting- What program are you using to account for sales? Notice that NO program up here except for E Seller Pro claims that they can sufficiently handle your accounting export needs. You need a way to sync up your auctions and fees with accounting.

2) eBay fees- You might want to check out all the options for getting those fees down. If there is no possible way then here's what I'm thinking your main problem is...which leads me to 3. I also think that there is a way for you to estimate how much your fees are. You have got to calculate that into the price you are selling your items for, and you have got to track what items have sold for, and what happens when items go unsold. I can possibly show you a chart of how I do it. It's worth 1 million dollars!! Trust me...without tracking through the systems I've created, I don't know what I'd do. No company or eBay conferance has ever properly displayed how to calculate out this stuff. In any case, figure that your insertion fee is .20-4.80 depending on how much the item is going for. Figure then, that 5.25% of the final selling fee then goes to eBay. So, in some cases, when people cancel their sale with me, our company roughly charges anywhere from $1-$5. And you also have to add in the .35 for the picture and whatever features. So, your fees might be around $5 to ship the item, $1.50 in eBay fees, 1.50 in paypal or credit card fees and it cost you $8 for the item. Your cost is $11. Ecommerce sales should roughly average out to profit 33%. Some sellers and some items get it higher. If you get higher than 33% give yourself a pat on the back! So, sell your item for 15.99 +3.99 for shipping. =19.98...you have 8.98 which is above the average. Of course there are then little other costs such as packaging materials, 5% going to auction management software, etc., but you get the point. You should be doing that with every product and have a strict system for tracking eBay fees. I keep eBay fees taped to all our employees desks! Do the same! Also, look into tricks of selling. If it's between selling an item for 9.99 +5.99 for shipping and 12.99 plus 2.99 for shipping, obviously go for the 9.99...that saves you .25 in eBay fees and final sale fees!

3) Product sourcing- You might be selling products that don't make enough of a profit to cover your overhead. Getting products from other countries must be costing you a ton in importing fees, etc. I would start here. Remember the basic rules they teach you in college about business.

Creation Marketing Manufacturing Monetization

4) Why are you just selling on eBay? The goal is to get people to all sides of ecommerce=Amazon, and your website

5) What marketing techniques are you using. Are you taking advantage of email programs, eBay traffic reports, keyword campaigns (not just on eBay), and eBay mailers?

Email me....let's get this fixed for you! You should be making good money soon enough!

sellthemoon had some good points of looking at ways to get off eBay and use other storefronts. Automation is also key.

Think of yourself as a record label trying to promote a band or your company sales. Be aggressive and make sure the products you are selling are profitable!

Shipping- I forgot to mention that for some items, Fedex will give you a better rate, if it's above 4lbs. USPS has poor tracking, but are good for some things....priority shipping for smaller items, or items going to within your state (yes it's sometimes cheaper to ship priority instead of parcel post), and International Mail is best USPS, most of the time.